Chinese Lone Bidder gets the 50-billion-peso High-Speed Train Project

The Mexican Federal Government went ahead and awarded a multi-billion-peso, high-speed train project to its only bidder, the China Railway Construction Corp.

The firm will lead a consortium that includes six other firms to build and operate the 210-kilometer passenger railway line between Mexico City and Querétaro. The consortium’s 50.82-billion-peso bid was about 18% higher than the Transportation Secretariat’s initial projection.

It was also the only bid out of a field of more than a dozen international firms such as Siemens of Germany, Alstom of France and Bombardier of Canada, many of which had asked for additional time to prepare bids. But the government declined to budge from its two-month time limit.

Transport Secretary Gerardo Ruiz Esparza defended that action by saying that on average such projects receive only two bids. He promised the project would be transparent, and that an international auditor would be engaged to monitor progress. Reports on that progress will be published online at a dedicated website.

The winning bid was accompanied by an offer of Chinese financing, which the government also accepted. That financing will represent 85% of the project’s cost at a fixed interest rate of 3.22% over 20 years, with a grace period of two and a half years.

Transport Secretary Gerardo Ruiz Esparza

The train will be able to carry 23,000 passengers a day at speeds up to 300 km/h, which will mean a 58-minute trip each way.

Each of the trains will consist of eight cars with a total capacity of 426 passengers, who will have access to internet, air conditioning and ergonomic seating. The service is expected to be operational in the second half of 2017.

China Railway Construction Corp.

Four Mexican firms — Constructora Teya, Grupo GIA, Promotora y Desarrolladora Mexicana and GHP Infraestructura Mexicana — are among members of the consortium and the presence of two of them has given critics some ammunition.

The owner of Grupo GIA is the brother-in-law of former Institutional Revolutionary Party President Carlos Salinas de Gortari, while Constructora Teya is linked to Eolo, a firm that rented planes to President Peña Nieto’s presidential campaign.

Senators of the National Action Party have said the tender process appears suspicious because “a group close to the current president looks to benefit” from the project.